Offeror(s): South East Asia Wood Industries Holdings Limited

Independent Adviser(s): Grant Samuel & Associates (Rule 18)

Company Meeting Date: 13/08/2002

On 17 June 2002, Fletcher Challenge Forests Limited (“FCF”) announced that it had reached agreement with the Receivers of Central North Island Forest Partnership (“CNIFP”) to purchase all its assets for US$650 million (“the proposed transaction”).

 

To raise funds for the purchase, FCF would issue new shares (ordinary and preference) to South East Asia Wood Industries Holdings Limited (“SEAWI”), a public listed company in Hong Kong, at a price of NZ$0.37 per share, to the value of US$200 million. SEAWI was the investing arm of CITIC, a state-owned investment company of the People’s Republic of China. Additionally, FCF would buy back from its largest shareholder, Rubicon Limited (“Rubicon”), the majority of its shares at NZ$0.37 per share. In return, Rubicon would receive a forest estate, valued at US$64 million for the purposes of this transaction. Rubicon would also sell the remainder of its shares in FCF to SEAWI at NZ$0.37 per share. The transfer of Rubicon’s shares in FCF to SEAWI would result in SEAWI obtaining a 35% shareholding in FCF. As such, shareholder approval was required for the proposed issue and allotment of voting securities in FCF to SEAWI.

 

For the proposed transaction to succeed, all the resolutions, which were interdependent, needed to be passed by the requisite majority of shareholders. The proposed transaction failed to proceed because two of the resolutions did not pass the 75% threshold at the meeting on 13 August 2002.

 

Grant Samuel & Associates prepared an independent adviser’s report on the merits of the proposed allotment to SEAWI and the transfer of shares from Rubicon Limited (“Rubicon”) to SEAWI as required by rule 18 to accompany the notice of meeting.